- Decline in global HRC offers impacts domestic buying
- Enquiries, sales decline amid festive holidays in latter half of August
Trade-level prices of hot-rolled coils have dropped about INR 1,100/t ($14/t), or 1.9%, compared with end-July, as per SteelMint assessment. Improved buying in the early days of the month and tight supplies were primary factors lending support to prices in August.
SteelMint’s weekly benchmark price assessment for HRC (IS2062, 2.5-8mm) stands at INR 56500-57,000/t, while CRC (IS513 Gr O, 0.9mm) prices are at INR 66,500-67,000/t.
As per the assessment on 27 July, prices for HRC stood at around INR 57,500-58,500/t, while CRC prices were at INR 67,000-68,000/t. Prices mentioned are on an exy-Mumbai basis, excluding GST at 18%.
Factors impacting market
a) Decline in HRC offers on global platform: The downward momentum of offers over the past three months has weighed on domestic buying interest. SteelMint’s India HRC (SAE1006) export index was assessed at $583/t FOB this week, unchanged against last week. However, China’s offer for SS400 was assessed at $605/t FOB, down $15/t against last week’s $620/t FOB.
While on a monthly average basis, the India HRC export index dropped $32/t from $617/t FOB in July to $579/t in August with one more assessment to be made this month. Similarly, China’s export offer dropped $12/t to $611/t FOB in August, gaining some support from the rally in SHFE futures a couple of weeks back. Thus, buyers’ ideas about domestic market prices continued to remain low and bargaining continues unabated.
Moreover, Indian steel majors have continued to find it difficult to conclude deals in the Southeast Asian and European countries lately because of boron addition and subdued demand. The goverment’s announcement of 15% export duty on non-alloyed steel has been the prime reason behind this. However, sporadic deals were concluded to the Middle East but at lower prices. This eventually led to piling up of inventory at Indian mills.
b) Improved buying in first half of August: Domestic trade market activities improved in the first half of the month and was better than the past couple of months. Lower prices as compared to earlier months pulled out some end-user industrial buyers who had sidelined themselves. This slight improvement in buying activity led to restocking by some distributors who had exhausted their inventory amid limited procurement in the previous months.
However, amid the seasonal disruption and holidays and festitivites in the second half of the month, buying interest cooled down. Nevertheless prices have remained rangebound for most of the month as supplies were also constrained amid mills taking maintanance shutdowns.
c) Tight supply lends support to prices: Limited availability of material in the market since mid-July has lent support to prices. Major steel producers opted for maintenance shutdowns in July which extended into August. This kept the inflow of materials slow in the distribution network as a result of limited activities in overseas markets after the export duty announcement even as mills grappled with slow domestic demand and the continual decline in domestic trade-level prices since April.
This apart, the notion that prices had almost hit the bottom which prevailed among market participants halted a steeper decline in prices.
Moreover, this week trade activities remained low compared to the first two weeks of the month. Yet some buyers found current price levels viable. Meanwhile, most of the market participants are waiting for the price announcement for September deliveries to be announced towards the end of next week.
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